Brisbane, May 9, 2008 AEST (ABN Newswire) - North Queensland Metals Limited (ASX: NQM) is pleased to announce that the company's 100% owned Baal Gammon copper/tin/silver/indium project in far north Queensland will proceed to development.
The second of NQM's operations, Baal Gammon is scheduled for commissioning in late 2009. NQM currently operates the Pajingo gold mine (60% NQM ownership).
Announcing the Company's decision, NQM Chief Executive Officer Mr John McKinstry said: "Baal Gammon is the first mine to be built in our strategy of developing significant operations in the historic Herberton mining region west of Cairns.
"Baal Gammon requires relatively low capital cost, can be brought into production quickly and is expected to generate high early returns due to the favourable copper grade profile. "While copper will be most important for the project in terms of volume and revenue, all four of Baal Gammon's metals are experiencing strong international demand.
"The NQM Board of Directors approved the development following completion of a mine feasibility study which showed the project was robust even under metal prices considerably lower than today's. Negotiations on the marketing of the concentrate will now be undertaken." The Baal Gammon project is expected to mine and process approximately 500,000 tonnes per year over a seven year life producing around 20,000 tonnes of concentrate per year.
Based on the preliminary engineering the capital cost will be approximately $47M giving a payback period just over 3 years.
Negotiations on financing for the project are now advancing and will be announced at a later date. Discussions have commenced with a number of parties all of whom have an interest in the concentrate but smelter terms are yet to be agreed.
The next steps in the project are to proceed to finalise the mining contract and electrical power supply, develop detailed engineering of the processing plant, undertake pyrometallurgy and variability testwork and negotiate concentrate sales. Second hand plant is being considered, and will include plant obtained in the acquisition of Pajingo but not required there for the revised operation.
Definitive numbers for the project budget will be released when the plant design is completed on the procured equipment.
The project is well advanced at the government approval and community levels. Good relationships have been established with local indigenous people; a draft Indigenous Land Use Agreement has been lodged and is currently in the public comment phase of the approval process. Community meetings have been held in the Herberton area and the project has attracted strong community support.
Mining leases are expected to be granted in July or August 2008 following which construction can commence. While the project is expected to be commissioned in late 2009, there is potential to advance this time frame by reducing construction time.
Mr McKinstry added: "At Pajingo we are working on the synergies that will exist between the two operations, building up the operational experience to ensure that are able to walk in with systems and procedures and the people who know them. In Peter Brown, our Project Manager, we have confidence of having the project delivered on time and on budget."
Exploration will continue to be directed toward building additional ore stocks from the nearby Baal Gammon North area. Additional feed has a substantial positive effect on the project economics.
Contact
John D McKinstry
Tel: 1300 308 832
Fax: 07 3666 0510
Email info@nqm.com.au
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